I know its probably been covered but some driver might want to explain to me in his own words…
It is where an agency uses a third party payment processor who effectively become your new employer. Many of these umbrella companies then use yet another ltd company, usually fronted by very foreign nationals (my last one was a 21 year old Fillipino girl) that keep changing every few weeks. Basically it a ploy to reduce the employers tax and National insurance obligations.
What it means to you as an ‘employee’ is that nobody is responsible for you. The agency will just refer you to the umbrella company. Last year I had my tax code changed seven times in six weeks with this sort of Mickey Mouse setup, which meant seven long calls to HMRC to get it resolved, with a typical wait time of 45 minutes on the phone to get through. Although I wasn’t charged for payroll processing by the umbrella company, many employees are.
It never going to be as easy or straightforward as regular PAYE through an agency.
Thanks Liberty guy,I will definitly avoid this then.Its probably saved me a lot of hassle,what you just wrote
The only umbrella you want to use is the one that keep the rain out.
elsa Lad:
The only umbrella you want to use is the one that keep the rain out.
Yep because if they don’t pay the HMRC , the HMRC will still come after you for the money even though it’s been deducted by the shysters already 
There’s a good explanation on the HMRC website:
gov.uk/guidance/working-thr … la-company
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Sploom:
I know its probably been covered but some driver might want to explain to me in his own words…
If it seems too good to be true…then it probably is. Like all of these schemes “buyer beware”, often operated by so called “accountants” so when the brown stuff hits the fan, the worker is the one left upto his/her eyeballs in the crap regarding HMRC and the so called “accountant” lives to fight another day and walks away with total impunity.
.
SCAM
Thank you for the reples.Im sticking to paye,I presume ltd is the same crap as umbrella
Sploom:
Thank you for the reples.Im sticking to paye,I presume ltd is the same crap as umbrella
Similar, but not the same. Working as a Ltd company has the client paying the agency for your time, they pass this (having creamed off their cut) to your limited company. Said limited company has one employee (you) who is paid minimum wage (and thus pays income tax and employee NI) just sufficient to keep his NI contribution record active. The limited company also pays employer NI, employer pension contributions and holiday pay out of what they receive. The Ltd company pays accountant fees and any other legitimate business expenses, yielding a gross profit. Corporation Tax is payable on this figure. Anything left is paid to the shareholders (ie you) in the form of a dividend, which doesn’t attract NI (but you do get taxed on it, although the first £2000 each year is tax-free).
Umbrella
Legal fiddle that permits Accountants to sell workers on the notion of “You too can claim expenses against your gross pay - like we executives do”…
You pay a commission, such as £27.50 for each payslip processed. In return, the accountant firm lets you submit fuel receipts and meal tickets for offsetting income tax, a loophole which has now been closed.
Thus, the accountant gets to take over £100 per month out of any staff on their books -for doing little more than sending you an E-Payslip each week with their deduction taken off, but no upside for the worker…
Oh, it also loosely guarantees you a single 8 hour shift per week - as they cannot make their deduction if you got left on the sidelines all week… A token shift will be provided, just to cover that “overhead”.
If you have no intention of claiming “expenses”, and are quite happy to pay PAYE taxes - then there’s no argument for ever needing Umbrella.
Always insist on PAYE. If the firm insists on you being Ltd - then tell them what hours you’ll work on YOUR contract with them, since you are self-employed and your own boss and all…
Thanks Roymondo.
Bloody hell,that sounds complicated.paye it is then